There hasn’t been much to get excited about or positive news for small businesses over the last few years. Brexit has cast an enormous shadow over the future of small businesses, with the uncertainty around the good deal, bad deal, no deal chaos making it very hard to know what to do. But the Autumn Budget appears to have thrown a lifeline to small businesses – with a few caveats.
It was clear that Chancellor Philip Hammond was aiming to give small firms some respite in the run up to Brexit, but he also offered them a glimpse of what life might be like in the event of a no deal.
The first major boon for small businesses was the cut in business rates by up to a third for all retailers across the UK with a rateable value of less than £51,000. What this means in practice is a saving of around £8,000 a year for almost 90% of all small and independent shops, pubs, restaurants and cafes. What’s more, this is set to last for two years.
For anyone who has been running a small and independent business in the retail sector, this may come as a huge relief. As well as all the Brexit furore, rates have been creeping up in recent years and applying a huge amount of pleasure to many struggling retailers and service providers.
In addition, Hammond also pledged to remove small businesses from the threat of a crackdown on ‘off payroll’ working. The muted VAT threshold revaluation also seems to have been permanently put on hold for now.
These moves have been very well received by many small businesses and associations representing them. Mike Cherry, the national chairman of the Federation of Small Businesses said: ‘This is the most small business-friendly budget that this Chancellor has delivered.’
He went on to add: ‘He has listened to our requests across many areas of tax and public policy, putting him firmly on the side of Britain’s small businesses.’
More help for retail
It was clear that the Chancellor had targeted the struggling retail sector for assistance as this was not all the help he announced for this part of UK industry. Many high streets have seen a massive reduction in footfall and investment and have been hit hard by a combination of internet shopping, out of town shopping centres and rising business rates. There was the announcement of a number of measures to try and reverse the worst of these trends.
As well as the reduction in business rates mentioned above, the Chancellor also laid out plans to invest £675 million in the Future High Streets Fund. This was set up to assist councils looking to regenerate high streets in failing areas.
Hammond, speaking about the downward trend of high streets, said: ‘Embedded in the fabric of our great cities, towns, and villages, the high street lies at the heart of many communities.’
He added: ‘And it is under pressure as never before as Britain adopts online shopping with greater alacrity than any other large economy. So, if Britain’s high streets are to remain at the centre of our community life they will need to adapt. Today we support them to do so.’
Local councils will be able to draw up plans for the rejuvenation of their high streets and make formal applications to the fund for assistance. This will help some failing high streets to get back on their feet.
Another area the Chancellor focused on was VAT. A revaluation of the VAT threshold had been much talked about and many small and medium businesses were worried they would be hit hard. However, not only did this not materialise, but it seems to have been binned at least for the foreseeable future. It will remain at £85,000, one of the highest rates in the world and way above the EU average of £20,000.
Hammond talked about a potential for change after 2022 but seemed to suggest there would be some leeway and that this could all change depending on what happened with our exit from the EU.
There was also continued tax relief for entrepreneurs who are still set to pay a lower tax rate of 10% rather than 20% on any capital gains when they sell or give away parts of their business. Although there was some tweaking of the rules regarding the qualifying period.
On the whole, small businesses and those involved in protecting and promoting small business were delighted with what they heard.
Phil Fleming, spokesperson for the Federation of Small Businesses, said: ‘It was the most enjoyable Budget speech I have ever listened to in my life. It is a brilliant Budget.’
Mr Fleming continued: ‘This will help a lot of businesses stay open until next year, and not close this year.’
He added finally: ‘There’s only so much he can do but it will be some help. He has tried to jump in ahead of the 2020 business rates revaluation. I think the high street will never come back, but the Chancellor has tried to put a bit of optimism into the economy.’
However, Hammond did seem to imply that a lot of what was said was dependent on what happened with the Brexit situation. If a no deal scenario were to play out, then he seemed to imply that there would have to be another emergency Budget put in place to deal with this. So, while there is good news for small businesses, it does seem this is all banking on there being a positive outcome to EU withdrawal. Come March of next year, if the situation has not improved, then it may be time to start worrying again in a big way. But for now, small businesses seem to be happy with what they heard.